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Properties in Singapore can be bought in a property auction in certain circumstances. This process involves putting a property up for bid with the highest bidder buying the property. 

In other countries prospective bidders must register in advance to attend a property auction. But in Singapore people can just walk in without pre-registering. The date, time and venue of the property auction is always posted on the auctioneer’s website. 

If you want a chance to buy properties at prices lower than what they’re valued at, property auctions may be worth considering. Chances are you won’t find these opportunities on the open market.

You can find all types of properties up for sale by auction. So, whether you are looking for a residential home (private or HDB), commercial building, or industrial plant or warehouse, just scour the property auction sites. 

Table of Contents

Why do Properties Get Put Up for Auction?

5 Types of Property Auctions

What Should I Know Before Buying a House Being Auctioned Off?

How to Prepare for a Property Auction

What Takes Place During the Auction?

Bidding Process

What Happens When the Auction is Over?

Conclusion

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Why do Properties Get Put Up for Auction?

A property can go up for auction for a variety of reasons and there are different types of property auctions depending on the circumstances.  

5 Types of Property Auctions

There are five different categories of property auctions and which category the property falls under depends on the profile of the seller: 

1. Owner auction
2. Mortgagee auction (the bank or other lender) 
3. Auction by sale of an estate
4. Public trustee auction
5. Auction by sheriff’s sale

1. Owner Auction

There are typically two reasons why an owner puts his/her property up for auction: 

• The owner has been ordered by a court to sell his/her property. This often happens in divorce proceedings. 
• The owner wants a quick no-hassle sale, so decides to put his/her property up for auction. 

2. Mortgagee Auction

A mortgagee auction occurs when a property has been taken back by the bank because the owner has defaulted on the mortgage loan.

By selling the property the lender is able to recover the debt owed. Most people refer to this as a “distressed sale” because it is caused by a seller who is assumed to be in financial distress. 

The bank will then put the property up for sale in a mortgagee auction. The goal is to sell the property for as much as possible to recoup the debt owed to the bank. 

3. Auction by Sale of an Estate 

An estate sale held as an auction is usually initiated by the person representing the deceased.

This representative will be the executor of the estate if the deceased person had a written will. If the deceased person did not leave a will, the court will appoint a beneficiary to administer the estate and he/she will be the one putting the estate up for auction. 

4. Public Trustee Auction

A public trustee auction is very unusual. The estates of deceased individuals are administered by the Public Trustee’s Office (PTO) when the estate doesn’t have a representative. 

For example, when 17 Jalan Bantai owned by 2 sisters was sold because they were presumed to have died. Neither sister had a written will nor were there any heirs to inherit or administer the property. 

A number of relatives of the sisters made claims on the estate, but they were ultimately unsuccessful. Therefore, the PTO took responsibility for administering the estate and in February 2018 the sisters’ property was put up for auction.

5. Auction by Sheriff’s Sale 

When the court orders property seized to enforce a legal judgment, the sheriff carries out the order and ultimately puts the property up for auction if the creditor requests it. 

Enforcement of the judgment is carried out by a creditor against a debtor in order to pay the judgment debt, which is owed to the creditor. 

To recoup the debt, the judgment creditor asks that the property be seized and put up for auction. This is considered to be another type of distressed sale. 

What Should I Know Before Buying a House Being Auctioned Off?

Advantages

The first thing you should know is that when you buy a house being auctioned off, rather than being sold on the open market, you have a chance to get it at a good price, especially if it is a distressed sale. This is the main advantage of buying at property auctions. 

Property being sold at auctions tends to be priced slightly lower than current market value. But we’re not saying that the property will go for a ridiculously low price. As discussed earlier, the goal is to sell the property for the highest possible price. 

There is complete transparency in these transactions as property prices are clearly announced to the buyer. Therefore, each bidder is made aware of all other offers and can decide whether or not to continue bidding. When the bids get higher than you want to pay or are more than the property is worth, you will likely stop bidding. 

Another advantage of going to property auctions is that you get access to unusual, rare, or unique types of properties. These types of properties typically only appeal to a limited number of buyers, which is why you rarely see them on the open market. 

Disadvantages

You also need to know that there are potential downsides to these property auctions. These are very fast-paced competitive environments, which some people find too high-pressure. 

Property listings are posted very close to the date of the auction. Therefore, buyers have little time to do market research, view the property and get legal advice on the auction documents. Buyers also have to get loan approval, which also takes time. This is in contrast to purchasing a house on the open market in which there are few, if any time constraints. 

You might also want to consider whether you can handle the pressure to react when the auction is underway. You need to decide right then and there whether to bid, plus the price to bid, and if you should keep outbidding or stop altogether. 

There is always the risk that you will end up overpaying on a property. This can easily happen if someone gets carried away trying to win a bidding war at an auction.

Pros	Cons
Access to rare, unusual, and unique properties	Limited time to see property, do market research and to get legal advice on auction documents and obtain loan approval
Possibility of getting a good price	Goal is to sell the property at the highest possible price
Transparency of prices being bid allows you to recognise your bidding limit	Pressure of bidding may be difficult to handle, and you may end up paying more than the property is worth

How to Prepare for a Property Auction

1. Determine Whether You are Eligible to Buy

If you are a Singapore citizen and want to buy a private residential property, you are likely eligible to buy, unless there are HDB restrictions. For example, if the Minimum Occupation Period (MOP) on your current HDB flat isn’t up yet. 

If you are a Singapore Permanent Resident (PR) or foreigner, you must abide by the Residential Property Act and get approval ahead of time from the Singapore Land Authority’s Land Dealings (Approval) Unit if your intention is to purchase residential property, which is restricted in Singapore. This applies to landed properties like detached or semi-detached homes, terrace homes, and cluster housing. 

2. Research the Property, View, and Inspect in Person

Approximately two weeks prior to the auction date the list of properties will be posted. When this happens, you should contact the auction agents to schedule a viewing of any properties you’re interested in. Then have it inspected and do your own market research to determine the true market value.

Your research should include the following: 

• If the property needs maintenance or repairs, determine the extent and the cost, especially if it’s a house that’s been abandoned. 
• Review the Urban Redevelopment Authority’s Master Plan and see if there are any developments close by and consider whether values might be going up in the area, or if anything else might affect values. 

3. Review Auction Documents

You should thoroughly read and get legal advice when you go over the documents from the auctioneer. These documents would include the agent’s Conditions of Sale, so that you totally understand the legal ramifications that could result from buying property at the auction. 

You may decide that it makes sense to engage a conveyancing lawyer to read the auction documents and advise you accordingly. 

4. Arrange for Financing 

If you need to take out a loan to buy the property, this must be arranged in advance. You will need in-principle approval (pre-approval) from a bank to obtain a mortgage. You will also need to arrange for the deposit.  

The deposit on the property can range from 5% to 10% if your bid is successful, but this depends on the terms stated in the Conditions of Sale. This is usually paid by cheque if your bid succeeds. 

5. Review any Amendments to the Conditions of Sale

Prior to the start of the auction, you may be given another copy of the Conditions of Sale. This usually comes with a request to sign and acknowledge that you have read and completely understand the terms set forth. 

Before signing, you should look for any amendments to the Conditions of Sale, and if so, ask any questions you have before bidding starts. 

What Takes Place During the Auction?

Terms you should know include the following: 

• Auctioneer: This is the person who conducts the auction. 
• Offer or opening price: This is the guide price that the auctioneer starts the auction off with on each property.
• Reserve price: This is a minimum price that each property is subject to. Only the seller and auctioneer know the reserve price. The amount bid must meet or exceed this amount for it to go through successfully. 

Bidding Process

A summary of the bidding process is as follows:

1. The auctioneer starts the auction by offering a property bidding by calling out for people to start making bids. 
2. Buyers who are interested raise a hand to show they accept that bid. People may bid more or less than the initial offer or opening price. 
3. The auctioneer shouts out the current bid and asks the participants if anyone wants to bid higher. This process continues on until there are no more bids, at which time the bidding comes to a stop. 

If the last bid, which is the highest, meets or exceeds the undisclosed reserve price, it succeeds. The auctioneer announces that the property is “sold” as the auctioneer’s gavel falls.

After that, the buyer and seller enter into a binding contract without any negotiations or changes on the auction documents. 

What Happens When the Auction is Over?

When the Final Bid is Successful

Once it is established that the final bid was successful, that bidder must provide the following to prepare for the Conditions of Sale to be signed: 

• His/her NRIC or passport;
• Company stamp; and/or
• Power of Attorney (PoA) (if applicable).

The winning bidder must also be ready to write a cheque for the deposit. If the sale will require a GST charge, a separate check must be written for the GST. 

The balance of the bid price is payable once the sale is complete. This usually occurs 8 to 12 weeks after the auction and depends on the terms of the Conditions of Sale. During this time, the buyer’s conveyancing lawyer will coordinate with the seller’s conveyancing lawyer on which documents will need to be executed. 

The buyer will take possession of the property once the sale is complete, which means he/she can move in whenever they want after that. 

However, if the buyer doesn’t follow through with full payment in line with the Conditions of Sale, or tries to back out altogether, this will be a breach of contract. The seller would then have the right to initiate legal action against the buyer. 

When No Bid is Successful 

If the last and final bid falls short of the reserve price, the sale will not go through, so the property won’t be sold at this auction. However, there is always an option for buyers interested in the property to make offers and have private negotiations after the auction. 

If the buyer and seller reach a deal after these negotiations, a private treaty sale may take place. This would follow a standard sale process between buyer and seller. 

Conclusion

A property auction gives homebuyers another avenue for hopefully finding a house at a good price. Whether buying a house at a property auction makes sense would depend on the buyer’s needs and his/her ability to withstand the stresses of the bidding process. 

Buyers should probably consult with a conveyancing lawyer for legal advice when reviewing the auction documents and when communicating with the seller. 

Disclaimer: The information provided in this article does not constitute legal advice. We recommend that you get the specific legal advice you need from an experienced lawyer prior to taking any legal action. While we try our best to make sure that the information provided on our website is accurate, you take a risk by relying on it. 

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